Buying Property Jointly
If you buy a property together with another person (or persons) then you should consider the legal entitlement which you will each have in that property
If you are buying a property together with someone we would recommend that you call us to ensure that the money that you put in is protected. To get in touch with us please either call us on 01629 56660 or make a Free Online Enquiry.
At the time of purchasing your property you can choose how you will hold the interest or share which you each have in the property. You can hold the property in one of the following ways:-
Joint tenancy is a specific legal way in which joint owners share their interest in that jointly owned property. If you chose to be Joint tenants you make a decision about the specific way in which you are entitled to a share of the property.
The joint tenancy means that you will own the property in equal shares with the other person (or persons) with whom you buy the property. If you are buying together with one other person then you have equal 50/50 shares in the property.
A Joint Tenancy creates a very specific entitlement in respect of that jointly owned property. The important rule of the joint tenancy is the rule of survivorship. A joint tenant cannot leave their share in the jointly owned property in their Will and their share does not form part of their estate on death. If one joint tenant dies then the remaining surviving joint tenant (or joint tenants) automatically has the benefit of the deceased joint tenant share. Where you are a joint tenant with one other co-owner you will gain the whole benefit and outright interest in the jointly owned property when your fellow joint tenant dies.
Owning as Beneficial Joint Tenants will effectively disinherit any children you may have as the property will pass fully to the surviving owner upon the death of the other owner.
If one party contributes a greater sum towards the purchase than the other and it is decided the property is to be held as Beneficial Joint Tenants, then there will be a legal presumption that you have both contributed equally. There is a serious risk that all or part of that increased contribution will be lost to the person who put that additional money in. Please note that upon sale of the property the net sale proceeds will be divided equally between the parties in this instance.
You must consider carefully if entering into a joint tenancy arrangement offers you protection and peace of mind you would expect to have.
Tenants In Common
If you decide that you wish to hold the joint property as tenant in common then you MUST state the way in which the property will be shared. You must state the interest which each joint owner has in the property. This can be in equal shares or in specifically stated but unequal shares.
The big difference between the Joint tenancy and the tenancy in common is that if a tenant in Common should die then that tenants share will form part of their estate and they can leave this in their Will. The surviving Joint owner does NOT take the others share in that property automatically as they would as Joint tenants
Tenants in common in equal shares
You may decide that you should each have an equal 50/50 entitlement to the interest in the property you purchase. As Tenants in common in equal shares you are confirming an equal entitlement. However, as tenants in Common you have an interest in a specific 50% share and your share will be part of your estate if anything should happen to you.
Tenants in Common in Unequal shares
You may decide that if you have contributed different amounts when you purchase the property (or if perhaps one of you is paying more off the mortgage every month) that the shares in the property should reflect the difference in contribution. Different shares to reflect who has paid what into the house are quite common. It is simple to set out the percentage which each owner will have the benefit of.
It is important that you consider at this point when you are purchasing your property the details of who shall be entitled to what interest in that property. It is important that you choose between the options of Joint Tenants or Tenants in Common.
You will appreciate that your decision as to how to hold the property is an important one. Please consider which of these methods (Beneficial Joint Tenants or Tenants in Common) will be best for you and complete the appropriate section at the bottom of this form.
Please also consider tax implications and whether your decision as to how you will hold the property is the most tax efficient way for you. Please liaise with your Accountant in this regard as this firm is not regulated to give tax advice.
You should also bear in mind that your decision at this stage may not be a permanent solution. You are able to change how the property is held at any time and it is strongly recommended you re-evaluate the position when your personal circumstances change.
This is because even if you complete the purchase of the property as beneficial joint tenants the joint tenancy can be severed unilaterally by any party at any time. The effect of severing the joint tenancy will be to convert the tenancy into a tenancy in common. This should only be done with full legal advice as to the implications of taking such action and what it will mean to both you and the other owner.
Making A Trust Deed
If you wish to be more specific about the way in which you and joint owner make provision about who is entitled to what from the property then we recommend that you set out all your wishes and intentions in the Deed of Trust.
We strongly recommend taking the time to have a deed of trust drawn up regulating your interests in the property and making sure there is total clarity as to who is entitled to what.
Without a Trust Deed to set out the intentions of the parties there will be no guarantee as to what might happen should there be a disagreement at a later stage. If, for example, there is a dispute then the Court may decide that a property should be split in 50/50 equal proportions when in actual fact this has never been an intention. If there is a dispute then there could be uncertainty as to who is entitled to what. A trust deed will prevent any arguments and any room for any possible claims based upon different views of what you each intended. If arguments do arise and the dispute goes to court then Judges are given broad discretion to decide which party gets how much. Such arguments are costly and the outcome is often uncertain. A deed of Trust prevents this.
Buying in the name of only one party
You should be aware that if the property is only purchased in one person’s sole name this does not preclude the existence of another person having an interest in that property.
If you intend that another person SHOULD have an interest in the property (even though the property is in your sole name) then we strongly advise that you should have a deed of trust which sets out that persons interest and clearly makes provision for the interest or share that the other person is to benefit from.
If you do not want another person to have a share or interest in the property then it is important that you obtain full and detailed legal advice as the ways in which another individual may gain an interest in your property or pursue a claim in respect of that property. For example a person might gain an interest in the property by way of a Resulting Trust if they have contributed to the purchase of the property or significant repairs or renovations believing this entitles them to a share/interest. A person might gain an interest if they have been led to believe that the property is also “theirs” and they can show that this was the “intention” when the house was purchased and they can claim a constructive trust.
Please be aware that cohabiting couples DO NOT gain any interest in each other’s property just because they live together – no matter how many years they are together. There is no such thing as “common law marriage” regardless of how long a couple cohabits. If a couple does not marry then there is no remedy for that couple when their relationship breaks down. Living together does not give rise to any special claims. However, there are circumstances where the arrangements during the years of cohabitation may lead a non-owning party to successfully claim an interest in a property by way of a trust.
The potential consequences of not making a Declaration of Trust at this time may include:-
- The possibility of a dispute at a future time;
- Becoming involved in litigation later on and incurring costs as a result;
- The possibility that the Court will divide the property in a way that is different how you had intended.
- The loss of some, or all, of your financial contribution to be invested in the property.
If you are unsure, please telephone for further advice. We are more than happy to give additional specific advice as to your personal circumstances but please note that this is outside the conveyancing fee and additional charges will be made. (Please refer to our Terms and Conditions), but we can offer you a competitive fixed fee quotation before you decide to proceed further.
Make an Enquiry
Why Choose Us?
- Delivering a first class legal service for over 100 years.
- We combine our local knowledge with up-to-date legal practices and technology to ensure that your needs are met and your expectations fulfilled.
- There are no hidden charges with any of the work we carry out for clients.